89bio should be bought on Madrigal data selloff, says RBC Capital

89bio (ETNB) is trading significantly lower after competitor Madrigal Pharmaceuticals (MDGL) reported positive Phase III nonalcoholic steatohepatitis data with resmetirom this morning, RBC Capital analyst Brian Abrahams tells investors in a research note. The downside is "inappropriate," says the analyst, who sees a buying opportunity for 89bio shares. Madrigal’s positive data corroborates that both fibrotic and cardiometabolic benefits can be achieved in large Phase III NASH studies with "thoughtful trial and endpoint design," writes Abrahams. He says 89bio’s pegozafermin targets distinctive mechanism apart from thyroid hormone receptors, so it could potentially be complementary or be geared to treat different NASH patients. In addition, NASH is a large market with numerous other metabolic co-morbidities that can support multiple mechanisms for different patient populations even if not ultimately combined, adds Abrahams. He believes today’s positive Madrigal data if anything is net positive for the field and pegozafermin’s ultimate success and market opportunity. Abrahams has an Outperform rating on 89bio with a $29 price target.